Page 11 - Iran OUTLOOK 2025

tonnes of inbound shipments valued at $29.4bn. Iraq emerged as a crucial trading partner, with bilateral trade reaching $7.6bn in just seven months. Iranian petrochemicals, cement and agricultural produce found eager buyers in Iraqi markets.
Relations with the European Union showed mixed signals. Whilst overall trade dipped marginally by 1% to €3.77bn in the first ten months, Iranian exports to European markets actually grew by 6% compared to 2023.
Despite American sanctions, Iran's oil sector displayed remarkable resilience. Output approached 3.2mn barrels per day (bpd) – the highest since 2018 – with Tehran finding creative ways to maintain exports. The Chinese port of Dalian emerged as a crucial transit point for Iranian crude, whilst smaller shipments to Bangladesh and Oman helped diversify the customer base.
A significant diplomatic breakthrough came with Parliament's ratification of a free trade agreement with the Eurasian Economic Union (EEU), potentially opening new avenues for regional commerce. This development dovetailed with Iran's improving trade-to-GDP ratio, which climbed to 55.54% in 2023 – up nearly 4% from the previous year.
• 3.2 Current account dynamics
Iran's current account performance in 2024 showed modest but steady improvement, with the surplus expanding to 2.9% of GDP from 2.8% in 2023. To put this in context, the current account surplus represents the difference between what Iran earns from its international transactions – including trade in goods and services, investment income and transfers – and what it pays out to the rest of the world.
The growth in surplus stems primarily from two key factors: increased oil export revenues and Iran's successful efforts to diversify its trading relationships, especially with neighbouring countries. This diversification strategy has helped Iran maintain economic stability despite ongoing international sanctions.
Looking ahead, forecasts paint an interesting picture of Iran's external position. The current account surplus is expected to peak at 3.6% of GDP by the end of 2024, followed by a gradual decline to 3.1% in 2025 and 2.7% in 2026. This projected downward trend suggests that while Iran has managed to strengthen its external position in the short term, maintaining these gains may become increasingly challenging.
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